What is Licensed Insolvency Trustee (LIT)?

A Licensed Insolvency Trustee (LIT) is a professionally licensed and regulated individual who is authorized to provide assistance to individuals and businesses facing financial difficulties, including debt management, insolvency, and bankruptcy proceedings. LITs are governed by federal legislation and overseen by the Office of the Superintendent of Bankruptcy (OSB) in countries like Canada. In other countries, a similar role may be played by an insolvency practitioner, bankruptcy trustee, or administrator.

The primary responsibilities of a Licensed Insolvency Trustee include:

  1. Assessing financial situations: LITs evaluate the financial circumstances of individuals or businesses seeking help with debt management or insolvency issues. They provide professional advice on the best course of action, which may include informal debt settlement, a formal proposal to creditors, or bankruptcy proceedings.
  2. Filing bankruptcy or consumer proposals: If bankruptcy or a consumer proposal is the best solution, LITs are responsible for preparing and filing the necessary documentation with the relevant authorities. They also notify creditors of the proceedings and oversee the process.
  3. Managing the administration of bankruptcy or proposal estates: LITs are responsible for administering the bankruptcy or proposal process, which includes collecting and liquidating assets, reviewing and approving creditor claims, distributing proceeds to creditors, and ensuring compliance with all legal requirements.
  4. Counseling: LITs are often required to provide financial counseling to individuals going through bankruptcy or consumer proposals, helping them understand the process, their rights and responsibilities, and the steps they can take to regain financial stability.
  5. Discharging debts: At the end of the bankruptcy or proposal process, LITs oversee the discharge of the debtor’s eligible debts, marking the end of their legal obligation to repay those debts.